The Challenges of Managing and Leading a Firm Through Rapid Growth

Businesswoman meditating in the middle of a busy commuter crowd
GettyImages/John Lund

There are few more inviting sounding challenges than dealing with rapid growth of a business. After all, who does not appreciate skyrocketing revenues, rapid new hiring and the energy and excitement in the environment when everything a group touches seems to turn to gold. Of course, any professional who has worked, managed or led a group or team during a period of rapid growth understands the reality is not quite as idyllic as it might seem to the outside observer.

Whether you are navigating the tornado-like atmosphere of a booming startup or experiencing the benefits of a new hit product in a long-established organization, managing and leading through periods of rapid growth is hard work. The purpose of this article is to explore some of the core challenges of navigating growth and offer ideas to help you succeed in this environment.

Seven Big Challenges Created by Rapid Growth:

1. Speed kills. Everything seems to be moving at a speed that is just fast enough to make it seem impossible to pause and think through next steps. Rapid growth creates a vortex that sucks the time and energy of everyone into the swirl, allowing little time to do anything but survive from one activity to the next. Speed becomes the stimulant for the group, with people striving to move faster and faster, all testing the natural limits of their own and the group’s collective abilities to execute.

2. Myopia prevails. The collective organizational view is skewed to nearsightedness. Everything in the immediate foreground is crystal clear and anything more than a few minutes, hours or days away is seemingly in some other time-space continuum. Forward thinking and strategy planning are out of sight in this chronically myopic environment.

3. Ship or perish mentality prevails. Quality often takes a back seat in the quest to ship! In some environments, especially technology and software, the mantra of “get to market and keep improving” is the guiding philosophy. In others, particularly around mission critical offerings, lapses in quality create excessive rework and create a drag on the firm’s reputation and future growth prospects.

4. People processes breakdown. In high growth environment, the processes around people decay. Onboarding is fast and furious. Hiring screening filters are loosened in the pursuit of getting bodies in seats to help the group keep pace with demands. Issues of long-term career development are placed in the parking lot for consideration some future day.

5. Tag, you're it! Leadership development takes on more of a battlefield promotion approach than a deliberate system guided and coached by watchful senior managers. First-time managers are tapped from the ranks of individual contributors and left to sink or swim on their own. Many sink.

6. Processes and controls do not scale with the demands. Managers can effectively lose control over the business and end up swimming in a sea of chaos created by insufficient systems, vast quantities of questionably accurate data and little to guide decisions other than our wholly unreliable guts.

7. Where are all the profits? For rapid growth startups and sudden hyper growth scenarios in more established businesses, it is possible to lose track of one of the most important issues of all: profits. The stressors on the entire organizational system can obfuscate this important arbiter of success as people expend costs and energy at a torrid pace with little view to whether it is making money.

Answer These Four Questions to Help Mitigate the Challenges of Rapid Growth:

Effective leaders and managers understand the risks posed by the issues described above and they work diligently to mitigate those risks.

Here are four key questions to ask and answer when faced with the challenges of rapid growth: 

1. Who’s minding the future? Some person or group is accountable to looking beyond the moment to a future scenario when rapid growth abates and the people in the organization find out that someone took away the punch bowl. The senior leader, including the ceo or general manager is accountable for maintaining a long-range view and thinking ahead for the business. Ideally, he or she holds the senior managers accountable to this via an on-going dialog and strategy process.

2. Who’s minding the store? It is essential to have someone laser focused on the operations of the business, particularly around the issues of processes, systems, infrastructure, and quality. While it is counterintuitive to ignore these issues, the constant firefighting mode in rapid growth environments tends to deemphasize making operational improvements and investments. Fight this inertia and cultivate a culture of continuous improvement for streamlining processes, eliminating bottlenecks, improving transparency and ensuring that system design and investment is done in the context of future needs. A dedicated operations owner will make addressing all of these issues a part of the regular work of all employees.

3. Who’s minding the talent? The tendency is to hire and promote fast and sort things out later. Effective leaders understand the cost of sacrificing quality in their talent identification, hiring, and development processes and resist the urge to move too fast.

One senior leader distributed the burden to the broader employee population, actively involving them in recruiting, vetting and onboarding new team members. The group used social media extensively and collectively, they took pride in and developed discipline for bringing in individuals who fit the culture and reflected the quality organization they were committed to creating.

The same goes for promotions. Teams in this environment were responsible for selecting their own leaders. This group selection process resulted in stronger collective mentoring and practically eliminated the manager-driven battlefield promotion and sink or swim approaches that are so destructive.

4. Who’s minding the culture? Clear, meaningful and actionable values are never more important in an organization than during a crisis, and rapid growth scenarios are absolutely a form of crisis, albeit a slightly more attractive one than a rapid decline situation. Effective high growth leaders understand the power of the values and they draw upon them daily as a reference point or guiding light on key decisions.

If the values are not visible or well defined, take the time to get the employees to help bring them to life. If they are present, live to them every single day. Start compromising on the values and you send a signal to the organization that they are just words on the wall. Live to them and the signal says, “We take our values seriously.” Use them in every aspect of the business from hiring to firing to resolving problems, serving stakeholders and growing the business.

The Bottom Line: 

There is nothing more exciting in the world of business than living through a period of hyper growth. From a career perspective, it is like lashing yourself to a bucking bronco and holding on for dear life during a wild ride. For leaders and managers however, cool heads must prevail on the issues of strategy, talent, operations and culture or the thrashing will quickly become debilitating.